Vanishing autumn property boom signals price decline

Updated: 2011-09-16 15:40


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BEIJING -- September has been known as golden. October, silver. Traditionally in Beijing, these months earned those monikers through booming real estate sales, but analysts say tightening government control will likely lead to a declining market.

"According to the volume in the first half of September, Beijing is doomed to see no 'Golden September' this year," said Zhang Dawei, the market research director with Beijing Centaline Property Agency.

The shrinking volume is definitely a sign of the cooling real estate market, said Chen Zhi, deputy secretary-general of Beijing Real Estate Association.

In the three-day holiday of Mid-autumn Festival from Sept 10 to 12, Beijing has seen only 407 contracts completed for residential apartments -- that's a 70-percent drop compared to the three-day holiday in May, and a 50-percent decline from the corresponding period last year, according to a statement released by the Beijing Municipal Commission of Housing and Urban-rural Development.

Falling on the weekends, the Mid-autumn Festival sales figures are definitely a major factor to analyze the "quality" of property market, Zhang said, adding that for successful marketing in real estate, companies must fully capitalize on weekends and holidays.

A stroll around the streets and alleyways in Beijing, makes it evident that real estate agencies are hard at work, as staff members hand out leaflets that promote alleged bargains and opportunities. Many agencies believe their survival is at stake, as rumors swirl of a number of agencies being forced out of business.

Last year, prices of homes sold in Beijing increased by 11.5 percent year-on-year, according to the Beijing Municipal Bureau of Statistics.

But in an attempt to cool the overheated property market, the city mapped out an ambitious price control target in March.

According to a statement posted on its website, the municipal government will keep prices of new homes, mainly apartments smaller than 90 square meters, steady or declining this year.

The target was issued after the State Council, China's Cabinet, required local governments to establish new home price control targets based on economic growth and increases in disposable income.

If Beijing maintains its control on real estate market, it's expected to lead to lower homes prices to increase sales volume, Chen said.

Beijing is not alone in this predicament. Similar conditions exist in cities such as Shenzhen and Changsha.

During Mid-autumn Festival, Shenzhen only sold 65 new apartments, which is far from the figure of 480 in the corresponding period of 2010.

Zhang says the strengthened purchase-control limitations have battered the confidence of those buyers who purchase homes not to live in but merely as investments.

So far, government measures to lower home prices seem to be effective. In August, the average price of a residential apartment in Beijing was 21,689 yuan ($3,392) per square meter, a 2.5- percent decrease from July.

It's expected that the expansion of property-purchase limitations to the second-to-third-tier cities will likely result in a period of adjustment in the property market, Zhang said.

But the government still faces complicated challenges in safeguarding the residential supply and controlling the surging rent, he added.

Home prices in Beijing have been surging for years, but the city's available land still falls short of demand. Beijing municipal government has said it will enhance the supply of apartments by providing about 200,000 units of low-rent housing as well as public rental housing units this year.